Capturing Cash/Check Supplier Refund Transactions

Last year I paid a legal retainer to my attorney after receiving his invoice. I captured this transaction by creating a Purchase Invoice and then making a Payment for the total of the amount. A few weeks ago my attorney was hired at as a senior partner at another firm so his old firm sent me a check for the portion of the unused retainer and I deposited the check in business checking. I considered how to record this transaction and saw @lubos post an answer to a similar question:
“When you return items, do you get cash refund or credit?
If you get cash refund, simply record this transaction under Bank Accounts tab where you will receive money and categorize them to Inventory on hand account.”

So in my case I recorded the transaction under Bank Accounts where I received money against “Legal/Professional Fees” and noted the Payer as my attorney’s prior firm. This seemed to capture all the requisite details on the Cash Balance, Profit and Loss Statement, Balance Sheet, General Ledger, etc. However, it didn’t get captured in either the Suppliers tab or the Supplier Statements >> Transactions report. So unfortunately, I cannot easily see that this transaction occurred by reviewing the supplier’s history with my company.

Would it be possible to update the software so these types of transactions (check/cash refund from supplier) get captured in the Supplier tab and the Supplier Statements >> Transactions report?

If you want this refund to be part of accounts payable, then record this refund as debit note under Debit notes tab.

This will establish credit with your supplier. Now, since they have actually refunded this credit, you should enter another transaction which will debit your bank account and credit Supplier credits account to clear this credit so supplier doesn’t owe you anything.

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That worked! Thanks!